Head of US Patent Office backs new approach to tech transfer

I recently had the chance to talk to David Kappos, under secretary of commerce for intellectual property and director of the United States Patent and Trademark Office. Kappos has a degree in electrical engineering from UC Davis and has some nice things to say about the campus, as you can read below. But most of his conversation with faculty and administrators during his visit was about a new approach to technology transfer that emphasizes long-term relationships between industry and university rather than relying on a “blockbuster” patent to pay off. He also had interesting things to say about the future of innovation in the US and the relationship with China. The full text of my article is below: an edited version also appeared in Dateline last week.


Universities need to champion a new approach to technology transfer based on long-term relationships with commercial partners, said David Kappos, under secretary of commerce for intellectual property and director of the United States Patent and Trademark Office, during a visit to campus April 28.

Kappos, who has a bachelor’s degree in electrical and computer engineering from UC Davis, met with a group of Deans and Vice Chancellors as well as the two Blue Ribbon Committees established by Katehi in December to review research and technology transfer. Chancellor Linda Katehi later hosted a dinner for Kappos at the Chancellor’s residence.

“We’re in the middle of a major shift in the mode of tech transfer,” Kappos said. Rather than focusing on licenses for individual patents, the new approach aims to simplify negotiation and quickly diffuse inventions into the community, while companies put long-term support into the university. A large company might commit to supporting a major area of basic research, while a small startup could contract with a campus lab to carry out research.

This approach, already being implemented by universities such as Stanford, the University of North Carolina and the University of California, can generate much more funding than relying on a “blockbuster” patent to pay off, Kappos said.

“There is no perfect model for university tech transfer, but there is a new model that can work alongside traditional tech transfer,” Kappos said.

Blockbuster patents are rare and most startup companies have a low probability of success, but universities tend to negotiate as if every invention is going to be a blockbuster, Katehi said.

“We have to approach this in a way that emphasizes a broader relationship,” she said.

In a competitive world, it is more vital than ever that universities protect their intellectual property, whether in agriculture, pharmaceuticals, genetics or materials science, Kappos said.

The challenge for the U.S. in the 21st century will be to compete with countries that have a huge advantage in manufacturing costs, he said.

“The only competitive edge we have left is in intellectual property,” Kappos said.

Both Kappos and Katehi attended a February meeting at the National Academies of Science where major universities, corporations and government agencies came together to discuss tech transfer. Kappos’ office is now organizing regional meetings with universities and colleges around the country to “get the word out,” he said.

Protecting intellectual property does not mean that it has to be inaccessible to the world’s poor, Kappos said. “But without IP protection, you do not have any leverage.”

Professor Andy Hargadon of the Graduate School of Management asked Kappos about the balance between the value of intellectual property and of relationships. In the nineteenth century, he noted, America took innovations from Europe and used them for industrial growth.

“IP should not be a point of contention between partners, but you have to protect IP or foreigners will take it for free,” Kappos replied.

Kappos’ agency is working on “humanitarian IP:” innovative licensing models, for example in crop science or pharmaceuticals, that make products available at low cost. He cited as an example Gilead Sciences of Foster City, Calif. The company has licensed Indian companies to manufacture its anti-HIV drugs for export to Africa, while charging a minimal royalty payment.

“This is a model that is really working,” he said.

Counterfeiting and piracy of U.S. intellectual property remains a formidable problem, especially in China, Kappos said. Before being nominated by President Obama in 2009, Kappos was vice president and assistant general counsel for intellectual property at IBM and lived and travelled extensively in Asia and the People’s Republic of China.

Technology exported to China is likely to be appropriated, and enforcement of intellectual property claims is spotty, Kappos said.

At the same time, Kappos’ boss, Commerce Secretary Gary Locke, and his Chinese counterpart chair a joint committee on trade and technology that has been working effectively on these issues, he said.

It is still worth filing patent applications in China on the assumption that the situation will improve, Kappos said.

Chinese companies are beginning to file patents in the U.S. On a recent visit to Asia, Kappos heard from executives of automaker BYD that they aim to be the third largest filer of U.S. patents by 2012. The Chinese are also making a strong play in genomics, noted Ken Burtis, dean of the College of Biological Sciences.

A recent court decision could have a big impact on patents in biotechnology and genomics. In March, a federal district judge in New York struck down patents held by Myriad Genetics Inc. of Utah on genes linked to breast and ovarian cancer, ruling that the genes were “products of nature.”

The decision could have a significant impact on the biotech industry, Kappos said. The Patent and Trademark Office has issued more than 20,000 patents for products purified from nature, including some 4,000 on isolated DNA sequences. Tens of thousands more patents in pharmaceuticals, chemistry and materials science could be at risk if the decision is upheld by higher courts.

Alexandra Navrotsky, interdisciplinary professor of ceramic, earth, and environmental materials chemistry, said that concerns over intellectual property issues can have a paralyzing effect on negotiating research contracts, even before there is anything patentable, and asked Kappos what he could do.

Kappos said that the government is starting to work on the issue. Inventors need to be able to concentrate their time and resources on developing their discoveries, protecting them and figuring out which are likely to pay off in commercial development, he said. The PTO has proposed a change that would effectively allow a 12-month extension to the provisional patent application period.  The U.S. needs a “post grant” mechanism to go back over patents after they are issued and ensure that they are secure, and the equivalent of a “small claims court” to settle patent disputes quickly and cheaply without litigation.

There also needs to be a system for third parties to file documents supporting or contesting a patent application, Kappos said. The current procedure, which accepts only hard copy submissions, is complex and little used.

Legislation currently being considered by Congress would address some of these issues, Kappos said. If passed, the bill would be the first significant reform of the U.S. patent system in almost 50 years.

Kappos graduated from UC Davis in 1983, earned his law degree from UC Berkeley in 1990 and spent most of his career with IBM before being appointed to his current job.

“I’m very proud to be an alumnus,” he said. “UC Davis is a great place to get a great education.”

“I was a diligent student, and that has served me well as a life skill — I work harder than anyone else,” he said. “You get the best results in any deal not because you’re the smartest or the flashiest, but because you are the last one standing, and I learned that here.”

Kappos grew up in Southern California and arrived at UC Davis with a good GPA, but his high school advisers told him not to set his sights too high. In his first quarter at UC Davis, he took a chemistry class with Professor Dino Tinti, now emeritus. Kappos scored an A plus, way above the rest of the class, and Tinti took note.

“He wrote to me and said, ‘you could have a future.’ That was the first time an academic in a position of authority had said that to me and that had a big impact on me,” Kappos said.

The U.S. still leads the world in bridging from university labs to industry startups, but more can be done, Kappos said. The government’s role is to get people together to make that happen, he said.

“I believe university research is fundamental to another American-led century, and I will do anything I can to make you successful.”

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